Summary and Final Tasks - Hidden

Key Learning Points: Lesson 7

1. The New York Mercantile Exchange is a market for crude oil, natural gas, heating oil, unleaded gasoline blend-stock, propane, platinum, and palladium.
2. Futures are legally binding obligations that require delivering or receiving the commodity.
3. Each contract lists commodity/price/date/location.
4. The most important function of the Exchange is “price discovery” and transparency.
5. Each commodity has its own delivery hub.
6. WTI is the global standard for crude oil.
7. Only licensed Brokers can trade on the Exchange.
8. Trades have to be conducted with Clearing Brokers.
9. There are two classes of market participants, “commercial,” or those interested in the physical commodity, and “non-commercial,” or “speculators.”
10. Most trading is purely for financial gain, as only a small number of contractual obligations are fulfilled in the physical (cash) markets.

Now that we are familiar with the workings of the Exchange and futures contracts, we will walk through the precise steps in placing a buy or sell trade on the Exchange. The words used and timing of the process are very important to successful completion and settlement of the trades.

Reminder - Complete all of the Lesson 7 tasks!

You have reached the end of Lesson 7. Double-check the list of requirements on the first page of this lesson to make sure you have completed all of the activities listed there before beginning the next lesson.